Regulators Are Concerned About Municipal-Bond Deals

By

Andrew Ackerman

April 8, 2013 6:56 p.m. ET

WASHINGTON—U.S. regulators are probing whether securities firms are circumventing rules implemented in the wake of the financial crisis to protect municipalities against potentially biased investment advice, according to people familiar with regulators' efforts.

At issue is whether banks are attempting to skirt postcrisis rules, including those restricting firms that provide financial advice to municipalities from underwriting certain municipal-bond transactions. Lawmakers and regulators implemented the changes to avoid...